January 9, 2024 | Posted in News
Around eight Infosys and 10 Wipro executives quit and joined rival firms in the last calendar year. (Reuters)
IT firms are now reworking the contracts with their senior executives by putting in a clause which restrains them from soliciting, hiring or poaching employees after joining rival companies.
The clause is being reinforced after the recent legal spat between Wipro and its former CFO Jatin Dalal, who joined rival firm Cognizant soon after leaving the company. The matter was referred for arbitration last week by a Bengaluru district court. Even Infosys sent a missive to Cognizant warning against unethical poaching.
Since taking charge in January last year, Cognizant CEO Ravi Kumar, a former Infosys veteran, has hired over twenty executive vice presidents and four senior vice presidents, many of whom are from Wipro and Infosys.
Around eight Infosys and 10 Wipro executives quit and joined rival firms in the last calendar year.
Dalal’s employment contract with Cognizant restrains him from soliciting or hiring any employee for one year post his termination of service at the IT firm. Similarly, Infosys’ employment agreement with CEO Salil Parekh also has a clause that restricts him from recruiting or soliciting or assist any person in hiring an employee from the IT firm till six months after the termination date.
“Companies are making agreements with senior management employees watertight. There are many grey areas, especially when an employee gets promoted to the senior management level,” said Pareekh Jain, founder, Pareekh Consulting.
IT firms are also clearly specifying the names of the competitors in employment contracts with senior management personnel.
Infosys’ list of eight competitors mentioned in the employment contract with Parekh include Tata Consultancy Services, Accenture, International Business Machines Corporation, Cognizant Technology Solutions Corporation, Wipro, Tech Mahindra, Capgemini and HCL Technologies.
Cognizant has also named these companies as competitors in Dalal’s employment contract, but Tech Mahindra has been replaced by DXC. Wipro has listed ten competitors, including Deloitte and DXC.